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Coal, gas on the outer as investments start to focus on 'green and gold' projects

Business

Queensland has almost $70 billion worth of projects sitting at the feasibility stage as Australia’s project investment cycle shows signs of slowly changing, according to a report from the Federal Government.

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It showed more funds were flowing towards battery technology and gold.

The value of gold and battery/electric vehicle-related projects rose by 33 per cent and 7 per cent, respectively, reflecting strong gold demand and expectations of strong growth for electric vehicles.

And the demand for gold has pushed the old Mount Morgan project back into contention after it was closed in 1990. The report said Heritage Minerals’ $60 million Mount Morgan project in Queensland was expected to be reactivated at the end of 2021.

But it also highlighted a reluctance to invest in greenfield coal projects and the preference has shifted to expansions, particularly in thermal coal where investors were backing out.

“Overall, our outlook for mining investment suggests that, while we will not see a return to the levels seen during the last investment phase (which peaked in 2012 with $268 billion in committed projects), there are some significant opportunities emerging for Australia’s resources and energy sector,’’ the report said.

The value of committed projects rose by 30 per cent to $39 billion, “marking a turning point in the cycle and a change in investment style.’’

The number of projects across Australia at the feasibility stage was 168 and worth up to $211 billion.

Committed and completed resources projects were expected to create almost 20,000 construction jobs and more than 7000 ongoing jobs.

It said there were about $32 billion of precious metal, base metal and other commodity projects at the publicly announced and feasible stages that are rated as likely or possible to receive a financial investment decision.

This was up from $28 billion in 2019.

“Developments in battery technology and expectations of growing electric vehicle manufacturing continue to spur investment in Australia’s nickel, cobalt, rare earths and lithium resources, with 32 projects now publicly announced or feasible, with a combined value of $15 billion,’’ the report said

A number of development projects are investing in processing facilities to produce battery cathode precursors in the form of lithium hydroxide.

“While some projects have progressed, the flow of projects from the feasibility to the committed stage remains slow in some areas, particularly coal and gas,” the report said.

“There are 45 coal projects at the feasibility stage, but many of these have been delayed. There is a growing preference for coal expansions over new project investments. There appears to be a growing reluctance to commit to greenfield coal projects, and an expanding list of lenders/investors have announced plans to no longer finance thermal coal projects. Some pension and equity funds are also divesting from, or limiting, their exposure to thermal coal, narrowing the range of investment financing options available to coal projects.

 

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